Impact of an emissions-based car tax policy on CO2 emissions and tax revenue from private cars in Ireland

This article assesses private car CO2 emissions and car tax revenue in Ireland over the 10-year period following the introduction of an emissions-based car taxation policy in 2008. We build on a model of the Irish car stock, which has new car sales, car fleet mileage, and CO2 emissions intensity data to develop a bottom-up picture of historic CO2 emissions from the car fleet. In this article, we develop a counterfactual scenario following car purchasing trends in EU countries that did not introduce an emissions-based purchase and annual car taxes over the same period. Relative to this counterfactual scenario, the CO2 emissions intensity of the new car sales would have been 9% higher in 2018. This results in an estimated cumulative saving of 1.2 Mt CO2 from 2008 to 2018 brought about by the tax change. Total annual emissions from private cars were 4.4% higher in the counterfactual scenario. The tax change also led to a fall in annual motor tax revenues. Recorded receipts from annual motor tax were euro0.77 billion in 2018. Our study shows that this would have been euro1.1 billion in 2018 under the pre-2008 tax regime. The estimated cost of abatement in this case ranges from euro1,500-euro2,220 per tonne of CO2 avoided over the period 2009 - 2018. The study uses the novel technique of applying a technology stock model to better understand the longer-term consequences of a government policy.

Automated summary

This article assesses the private car CO2 emissions and car tax revenue in Ireland over a 10-year period following the introduction of an emissions-based car taxation policy in 2008. The study utilizes a model of the Irish car stock, incorporating new car sales, car fleet mileage, and CO2 emissions intensity data to provide a comprehensive analysis of historic CO2 emissions from the car fleet. A counterfactual scenario is developed, comparing car purchasing trends in EU countries that did not implement emissions-based purchase and annual car taxes over the same period. The study reveals that, compared to this counterfactual scenario, the CO2 emissions intensity of new car sales in 2018 would have been 9% higher, resulting in an estimated cumulative CO2 saving of 1.2 Mt from 2008 to 2018 due to the tax change. However, total annual emissions from private cars would have been 4.4% higher in the counterfactual scenario, and the tax change also led to a decline in annual motor tax revenues.